Mutual Fund Focus - Reliance Diversified Power Sector Fund

Investment Objective

• This scheme aims to generate continuous returns by investing in
  • Equity securities and equity related securities Power and other Associated Companies or
  • Fixed Income securities of Power and other Associated Companies
• Reliance Diversified Power Sector Fund has been ranked 1st in the Diversified Equity category by ICRA in March 2009

Who Should Invest?

• An investor looking at investing for the time horizon of at least 3 – 5 years
• An investor with high risk appetite willing to invest in a sectoral fund
• An investor looking at adding the power sector in an otherwise diversified portfolio

About the Fund Manager – Sunil Singhania

• Education: B.Com, Chartered Accountant and CFA (U.S.A)
• Experience: Mr. Singhania has over 15 years of experience in Indian Equity Markets. Before his association with Reliance Mutual Fund, he held senior positions at Motisons Securities Private Limited and Advani Share Brokers Private Limited
• Other Schemes Managed: Reliance Growth Fund, Reliance Banking Fund and Reliance Equity Fund

Scheme Details

Performance Review (As on 13th May 2009)

• Reliance diversified power sector fund has not only generated superior returns to its peers but has also shown consistency in its performance during the recent market fall
• The fund has the flexibility to be 0-100%% in equity or 0_100% in debt. Thus the manager has the flexibility to increase its cash exposure and reduce its equity exposure when valuations tend to get a little stretched

Portfolio Analysis (As on 13th May 2009)

• Power Generation, Diversified and Oil and Petroleum sector are the preferred sectors in the portfolio presently.
• The portfolio is well diversified within the power and energy sector as the exposure is taken in power utilities, power equipments makers, power infrastructure providers and power financiers

iTrust Observations

• Why Power Sector: Huge potential is seen in power sector companies when the power deficit in India is approx 14%. The Government initiatives such as "Power for all by 2012" drive create new business opportunities for the power companies. Current stock market conditions have also given an opportunity to investors to buy quality stocks in power sector at cheaper valuations
• Investment Strategy: Since the inception of this fund, the fund manager has followed the "Buy and Hold" strategy maintaining low portfolio turnover. Being a concentrated fund, the manager keeps the flexibility to move between cash and debt. It currently holds 31% in cash and debt.
• Being the only power sector fund in India, huge inflows are seen in the fund. Since inception in May 2004, its AUM has increased from 376 cr to 3942 cr in 5 years duration. Regular inflows also contribute to the huge cash holdings in the portfolio
• Currency Risk: Since the fund will be investing in international securities, the currency differentials might adversely affect the Rupee returns of the fund.
• The performance of sectors covered such as oil and gas, metals etc. has been very volatile in last 3 years, thus making the investment more risky.
• Since the portfolio will be concentrated based on power and energy theme, the investor might not enjoy the benefits of a diversified portfolio.

Disclaimer

Neither the information, nor any opinion contained in this note constitutes a solicitation or offer by iTrust to buy or sell any mutual fund units. The information contained in this sheet is generic. Please consult your financial advisor for suitability of the product.
- MUTUAL FUNDS ARE SUBJECT TO MARKET RISK. PLEASE READ THE OFFER DOCUMENT CAREFULLY BEFORE INVESTING.